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ARCHIVED - Decision CRTC 2000-395

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Decision CRTC 2000-395

Ottawa, 26 September 2000
Bell ExpressVu Inc.
Across Canada – 200013748
Application processed by
Public Notice CRTC 2000-78
dated 7 June 2000

Summary

Bell ExpressVu is the licensee of a national, direct-to-home satellite distribution undertaking. By majority vote, the Commission authorizes, Bell ExpressVu to employ a distribution system that will interconnect multiple unit dwellings (MUDs) by crossing property lines, or by crossing over or under public streets or highways, using terrestrial facilities. As a result, Bell ExpressVu will be able to expand distribution of its service to residents of MUDs, particularly to those who cannot receive satellite services otherwise.

1.

The Commission approves, by majority vote, the application by Bell ExpressVu Inc. to amend the licence for its national, direct-to-home (DTH) satellite distribution undertaking. The Commission authorizes the licensee to distribute its service to subscribers in multiple unit dwellings (MUDs) using terrestrial facilities that may cross property lines, public streets or highways. This will enable the licensee to locate reception equipment on one site and to connect subscribers in MUDs on other sites using terrestrial facilities.

Background

2.

In Public Notice CRTC 2000-51, the Commission determined that Bell ExpressVu's current licence allows it to serve subscribers in an individual MUD or several MUDs on the same property, using an internal distribution system. The Commission concluded, however, that a licence amendment would be needed for Bell ExpressVu to interconnect MUDs using terrestrial facilities that cross property lines, or cross over or under any public street or highway.
The application

3.

Bell ExpressVu argued that serving MUDs efficiently and cost effectively is critical to its success. According to the licensee, it has had difficulties competing in the MUD market against incumbent providers largely because of practical constraints that limit its ability to serve MUDs. The licensee explained that using terrestrial facilities to cross property lines, public streets and highways would overcome these obstacles.

4.

In its application, Bell ExpressVu outlined the differences between DTH and cable undertakings, and spoke to concerns raised by the cable industry regarding competitive equity. Among the differences, Bell ExpressVu noted that:
  • unlike cable, DTH cannot allocate to local expression any portion of its required Canadian programming contribution;
  • DTH can, however, distribute distant Canadian signals that Class 1 and Class 2 cable licensees are not authorized to distribute; and
  • DTH undertakings can, by condition of licence, carry a second set of 4 U.S. commercial signals and one non-commercial U.S. signal (U.S. "4+1" signals).

5.

Bell ExpressVu explained that it is authorized to carry more distant Canadian signals than cable because its DTH undertaking utilizes a different kind of technology and its service is national in scope. It pointed out that its authority to carry a second set of U.S."4+1" signals is derived from Decision CRTC 98-501. In that decision, the Commission noted the Canadian Association of Broadcasters' (CAB) support for such carriage on DTH. The Commission also stated that the licensee's agreement with the CAB to compensate and protect local broadcasters would offset any potential harm resulting from the provision of a second set of U.S. "4+1" signals to subscribers.

6.

As part of the application process, the Commission asked Bell ExpressVu whether it would continue distributing programming services that it is not required to carry by the regulations, such as affiliates of Télévision Quatre-Saisons and the Global Television Network, as well as provincial educational services. The licensee confirmed that, for competitive reasons, it will continue carrying these services on a voluntary basis and indicated that it would accept a condition of licence in this regard.

7.

The Commission also questioned Bell ExpressVu on whether it would implement measures to ensure that MUD subscribers have access to relevant local signals. Bell ExpressVu responded that it will continue to expand its efforts in this area. It stated that it would take all commercially reasonable steps to guarantee that its subscribers have access to local signals, including encouraging building owners to provide such signals by means of master antenna television systems.
Interventions

8.

The Commission received two interventions to the present application: one in support from a subscriber who favoured expanded competition in the MUD market, and another in opposition from the Canadian Cable Television Association (CCTA).

9.

The CCTA argued that, by interconnecting MUDs as proposed, Bell ExpressVu would, in effect, be carrying on a cable distribution undertaking and should, therefore, be subject to the same regulatory requirements as cable. The CCTA's main concern is that DTH can offer a second set of U.S. "4+1" signals, along with additional distant Canadian signals. It contended that Bell ExpressVu's ability to configure its system in the manner described, while distributing signals currently unavailable to its cable competitors, contravenes the principle of competitive equity. For this reason, the CCTA proposed that Bell ExpressVu be required to apply for a cable licence whenever it wishes to interconnect MUDs using terrestrial facilities to cross property lines, public streets and highways. Alternatively, the CCTA suggested that the Commission authorize cable undertakings to offer the same range of signals as DTH operators.

10.

Bell ExpressVu responded that a requirement that it obtain a new licence each time it wishes to interconnect MUDs using terrestrial technology would only delay its entry into the MUD market and slow down competition in this area. The licensee reiterated the arguments made in its application that the regulatory difference between DTH and cable stems from the particular technologies used and the different reach of the two types of distribution undertakings. Bell ExpressVu repeated that it has access to a variety of Canadian signals and is able to distribute a second set of U.S."4+1" signals because it is a national service and it has entered into an agreement with the CAB to protect local broadcasters.

11.

Bell ExpressVu further argued that cable does not have the available analog channel capacity to carry more signals. It encouraged the Commission to consider requests from cable licensees to carry additional local and regional services as space becomes available on the digital tier of their systems, provided that they make reasonable commitments to protect local broadcasters.
The Commission's determination

12.

The Commission considers that Bell ExpressVu has satisfactorily responded to concerns regarding competitive equity between cable and DTH undertakings.

13.

In the Commission's view, requiring Bell ExpressVu to apply for a cable licence in each market where it seeks to interconnect MUDs would not be technologically or administratively practicable. The Commission reiterates that, in PN 2000-51, it noted that Bell ExpressVu could apply for an amendment to expand the scope of its licence since it was intended to provide service to any household wishing to receive its DTH service. In addition, with regard to the CCTA's argument that competitive inequity is created because a DTH operator can carry a second set of U.S. "4+1" signals, alongside additional Canadian distant signals, the Commission notes that it is currently considering applications from cable licensees across Canada requesting authority to implement similar carriage arrangements on Class 1 and Class 2 systems (see Public Notice CRTC 2000-73).

14.

The Commission notes that no broadcaster intervened in this proceeding. Accordingly, the Commission is satisfied that further regulatory intervention is not warranted at this time. Moreover, the Commission is convinced that, for competitive reasons, Bell ExpressVu will ensure that local signals are accessible to its subscribers and that it will voluntarily continue to carry a wide range of Canadian services.

15.

The Commission is further satisfied that approval of this amendment supports its efforts to ensure that all Canadians have a choice of broadcasting distribution undertakings. Approval will also provide an efficient method for Bell ExpressVu to expand distribution of its service to subscribers in MUDs and will provide an alternative to residents of MUDs who, for technical reasons, might not otherwise be able to receive satellite signals.
Other matters

16.

In accordance with section 22(1) of the Broadcasting Act, the above-mentioned amendment will only be valid when the Department of Industry certifies to the Commission that a broadcasting certificate has been or will be issued.
Secretary General
This decision is to be appended to the licence. It is available in alternative format upon request, and may also be examined at the following Internet site: www.crtc.gc.ca 

Dissenting opinion of Commissioner Stuart Langford

I disagree with the majority in this matter and would have denied this application or deferred final disposition of it until after the process initiated by Public Notice CRTC 2000-73, the process referred to in paragraph 13 of the majority decision, is concluded. In my view, equity demands that the issues raised in this application and in PN CRTC 2000-73 be determined simultaneously.
Background
This matter is the second of a two-part process begun on September 8, 1999 when, by letter, Bell ExpressVu Limited Partnership (Bell ExpressVu) informed the Commission that it had developed a plan to supply its products to residents of multiple unit dwellings (MUDs). The letter specified precisely how Bell ExpressVu would service subscribers living in stand-alone apartment buildings, in apartment complexes consisting of buildings on the same parcel of land and in apartment buildings in close proximity to each other but separated by roadways or property boundaries. The September 8th letter was not an application to extend the terms of Bell ExpressVu's direct-to-home (DTH) licence but a statement of intention.
The Commission responded by requesting, among other things, information from Bell ExpressVu regarding how it squared its stated intentions with the terms of its licence as set out in Decision CRTC 95-901. In that decision Bell ExpressVu's service is described as being "¼ exclusively to individual subscribers in all parts of Canada on a DTH basis." On December 21, 1999, having reviewed Bell ExpressVu's response to its inquiries, the Commission issued Public Notice CRTC 1999-199 setting out the background to this matter and seeking input from interested parties.
Reaction was mixed with 12 respondents supporting Bell ExpressVu's plans and others, notably two cable companies in their own right and the Canadian Cable Television Association (CCTA) on behalf of its members, taking the opposing view. In its January 20, 2000 reply to these interventions, Bell ExpressVu characterized supporters as being in favour of bringing "competition to this market" and opponents as interests that "¼ favour an interpretation that would delay or thwart the development of competition." With respect, such a characterization of the issues involved is too narrowly focused and overlooks a number of important matters.
In Public Notice CRTC 2000-51, the Commission responded to the positions of the parties and the record compiled to that date by breaking Bell ExpressVu's plans into two parts. It decided that Bell ExpressVu's original licence permitted the servicing of subscribers living in single MUDs or in complexes made up of more than one MUD standing on the same property. At the same time, however, the Commission ruled that the original licence did not permit Bell ExpressVu, "¼ to employ a distribution system that would interconnect MUDs by crossing property lines, or by crossing over or under any public street or highway."
The Commission stated, however, that should it wish to market its services in a manner proscribed by that licence, nothing prevented Bell ExpressVu from converting this aspect of its September 8th, 1999 letter of intention into an application to amend the terms of its licence. In application 200013748, Bell ExpressVu did precisely that and on June 7, 2000, the Commission issued Public Notice CRTC 2000-78 calling for comments.
A rose by any other name
Perhaps because PN CRTC 2000-78 raised issues already addressed by respondents to PN CRTC 1999-199, only two parties intervened. Mr. Trevor Peasland, supporting the application, stressed the benefits of consumer choice:

"As a Condo owner, at the present time I am unable to access satellite techniques or landline distribution and I certainly feel that I should have this choice."

In opposition to Bell ExpressVu's application, the CCTA acknowledged the benefits competition brings to consumers but indicated that the application raised issues of competitive equity:

"The CCTA notes that it supports competition between broadcasting distribution undertakings (BDUs) as competition can provide consumers with greater choice and stimulate innovation and efficiency. However, in order for those benefits to be achievable it is essential that regulatory rules be fair and equitable."

In the CCTA's estimation, to grant Bell ExpressVu the licence change it required to link a number of MUDs located on separate properties via one network of wires served by one signal receiver was, in fact, to allow it to operate a cable distribution undertaking by another name. In support of this assessment, CCTA referred to the Commission's own determination in paragraph 10 of PN CRTC 2000-51:

"¼ the Commission considers that the licensee would then be carrying on an undertaking that, for all practical purposes, is identical to one carried on by a cable distribution undertaking."

What's sauce for the goose
Having concluded, correctly in my view, that were its application to be approved Bell ExpressVu would be competing with existing cable companies as a cable company, the CCTA turned its attention to the issue of competitive equity. In paragraph 12 of its intervention it says: "¼ if Bell ExpressVu wishes to operate as a cable distribution undertaking, then it should be subject to the regulatory obligations of a cable distribution undertaking." Such a level playing field could best be achieved, the CCTA contended, in one of two ways: either Bell ExpressVu should be obliged to apply for cable licences for the sort of undertakings envisaged by this application or cable BDUs should be accorded the same carriage privileges now enjoyed by DTH providers.
The first option would certainly level the playing field but only, one must assume, by decreasing Bell Express Vu's marketing efficiency and increasing the Commission's administrative workload. The second option, extending DTH carriage privileges to cable carriers would achieve the same competitive equity in one single stroke of the regulatory pen.
Timing is everything
However, applications by various Canadian cable companies entreating the Commission to grant the very carriage privileges referred to by the CCTA in its intervention (to distribute a second set of U.S. network signals and to distribute additional Canadian signals) are the subjects of a separate Commission process. That process was formalized by Public Notice CRTC 2000-73, now in the final stages of consideration. A decision will be made and released shortly.
Such a short delay could in no way seriously jeopardize Bell ExpressVu's marketing plans regarding subscribers living in apartment buildings. Two of the three MUD marketing strategies it put before the Commission on September 8, 1999 have now been declared to be consistent with the terms of its licence (see Public Notice CRTC 2000-51). It has plenty of scope for seeking new customers. On the other hand, the majority's decision could very well result in an inequitable competitive situation by creating, in terms of content offered, two classes of cable companies, haves and have-nots. Simply by deferring final consideration of this application until it could be dealt with at the same time as PN CRTC 2000-73, any inequities real or perceived could have been avoided. That is the route I would have chosen.

Date modified: 2000-09-26

Date modified: